Number of fixed-rate mortgage deals at 90%+ loan-to-value has almost doubled in a year

There are now 147 fixed-rate mortgage available if you have less than 10 per cent deposit — an 88% increase on the 78 products available in February 2009.

Speaking of fixed rate mortgages generally, not just high LTV, the increase is more modest: 46% more products than at this time last year. The average loan-to-value on a fixed-rate mortgage is up 1.3 percentage points to 76.8%.

Tracker mortgage borrowers, however, are not so well served at high loan-to-value ratios. The number of tracker mortgages with a loan-to-value above 90 per cent grew only slightly, from 43 to 51 in the last twelve months.

Santander cuts its fixed rates today by up to 0.40 per cent

Responding to a general increase in mortgage market competitiveness, Santander has trimmed the rates on its five-year fixed rate mortgages by up to 0.25 per cent. The range includes a 4.99% deal for purhases only (70 per cent LTV limit, £995 fee), or 5.15 per cent for remortgage customers (75 per cent LTV limit, £995 fee).

Santander tracker mortgages also get trimmed by up to 0.40. We supsect the Spanish megabank might have further cuts up its sleeve, but for now these deals represent a good show for borrowers looking for medium-range rate stability on purchase mortgages.

Buyers, not remortgagers, will benefit from HSBC's increased lending quota

HSBC has responded to growing demand from first-time buyers, announcing an increase in the amount of money it is earmarking for purchase loans at the 90% loan to value limit.

The bank's £500 million increase in allocated lending should enable around 3,650 additional house purchases between now and the New Year (based on an average first-time purchase price of £150,289).

HSBC Head of Mortgages, Martijn van der Heijden, comments that many buyers who put off purchasing last year are now heading back to the housing market as they have seen reports of prices bottoming out.

If you want a fixed-rate 90 per cent mortgage, HSBC's rates work out as follows:

• 5.99 per cent fixed for 2 years
• 6.49 per cent fixed for 5 years
• Both these deals cost £599 in fees.

Competing deals are available from NatWest (5 years at 5.99 per cent, with no fees) and Yorkshire Bank (2 years at 5.99 per cent, with a £999 fee).

HSBC is also offering 90 per cent LTV mortgages with tracker interest rates. You can opt for a 2-year discounted tracker (3.89%, booking fee £1199) or a lifetime tracker (4.09 per cent, booking fee £999).

The surprise is that competition for lending at this level is still so low.  However, with the cost of inter-bank lending having dropped from its credit-crunch high to a historically low rate, we might see more lenders boarding the 90% LTV bandwagon.

What you save on fees, you'll more than repay in interest

Be careful if you're tempted by one of the no-fee deals being introduced this week by Northern Rock.

Of course, they're appealing to borrowers who have been put off by the need to pay at least £900 up front for other typical offers out there.  Many of us simply don't have that in spare cash.

But Northern Rock is no chump when it comes to profits: it increases its rates by up to a whole 1% in return for cutting out that fee. That's the kind of interest rate premium that could leave you cursing your pocket calculator in a year or two's time.

Facts on the new deals are as follows.  If you took out one of the new 2-year fixed rate deals, your options are:

• 4.09 per cent fixed until 2011 with a £995 fee, or
• 5.09 per cent fixed until 2011 without the fee.

So you'll save yourself nearly a grand today.  But 1% interest on a £100,000 mortgage is £1,000 a year anyway--not counting compounding, i.e. interest on top of interest. It doesn't take a maths whizz to demonstrate that this mortgage will cost you double what it saves you over the two-year fixed period.

If you're after low fees, try something rarer perhaps — for example, a discounted variable 2-year deal from Market Harborough Building Society (up to 75% LTV) costs only £245 in fees.

...and who could blame them?

Paragon Mortgages has just released figures showing that nearly 7 in 10 mortgages submitted through mortgage advisers in April, May and June this year were for fixed-rate deals.

This is the biggest proportion of fixed rate mortgages since Paragon started surveying the market in 1996. The most popular fixed-rate mortgage term was 2 years. Meanwhile, tracker mortgages fell to only 26% of applications.

We're not surprised, as trackers don't look so appealing when the rate can only really go up from here. Get stuck on a tracker now, paying 2-3% over base, and you could be a bit bothered were rates to take a jump upwards.

However, Paragon MD John Heron says it might not be just because of that sort of common sense.  When the base rate was on its way down, lenders pulled their trackers to stop everyone jumping on the bandwagon, so applicants were funnelled towards the fixes. (When trackers re-emerged, of course they had a lot more margin built in).

Fixed-rate mortgages are still looking low if you've got enough deposit, and August is a good time to get accepted while the 'queue' is shorter than usual.